First of two parts
A candidate from a well-known benchmark firm dropped out of our search for a General Manager position because the hiring manager took a week to respond to his interest. He said:
It’s not like I need their job. If it takes them a week to respond to a resume like mine for a job of this importance, they’re not the kind of company I want to work for. I move fast, and I can already see that my style wouldn’t fit their culture. –Wind River Associates
As a corporate recruiting leader, know that in a highly competitive college marketplace, there may be nothing that damages corporate recruiting results more than slow hiring.
Tens of millions lost each year
Many firms now go the first step and track some variation of the “time-to-fill” metric. But despite that metric, not only are firms still almost universally guilty of painfully slow hiring, but to compound the problem, few recruiting leaders truly understand the many negative business and recruiting impacts that result from slow hiring.
I estimate that the impact at most corporations exceeds tens of millions of dollars each year. And the dollar loss from this factor may be as much as 10 times higher than losses resulting from low recruiting efficiency related to the more popular “cost-per-hire” metric.
It’s not enough to be conscious and aware of slow hiring. Identify and then quantify in dollars each of the negative impacts of slow hiring, so that everyone from the CEO on down will support the streamlining of the process.
After several decades of work on “speed hiring,” I have put together an extensive list of the negative consequences associated with taking too long to hire. Here are five (5) of the most damaging factors; I’ll list the rest of them tomorrow:
5 reasons “slow hiring” damages business results
The negative impacts resulting from slow hiring are numerous. The most damaging ones are listed here in descending order of their negative impact.
1. You will lose most of the candidates who are in high demand during the late stages of your recruitment process – When currently employed top performers decide to enter the job market, they are likely to be quickly inundated with recruiting requests and offers, which means that often they will only be on the job market for a matter of days.
So if you/your firm drag out the hiring process over time, the most sought-after prospects (i.e. in-high-demand prospects) will have many opportunities to make quick offer acceptance decisions while you are still only midway through your hiring process.
Your top candidates assuredly will receive alternative offers and will be forced to make a decision as to whether to accept “a current offer” that will soon expire, rather than to wait for “a possible future offer” from your firm. So even if you capture them as an applicant, the odds of them still being available when you reach the late stages of an extended recruiting process is almost zero (with the one exception if you happen to have a powerhouse employment brand like Google).
My research indicates that the top 10 percent of candidates are often gone from the marketplace within 10 days. I also estimate the recruiting loss from missing a single game-changer, purple squirrel, or innovator recruit to be over $1 million each.
The lesson to be learned is: Speed of hire is most important when you are competing against other firms for currently employed “in-high-demand” top talent. You simply must hire fast, because if you don’t, the competition will take this top talent off the market before you have the time to make a hiring decision. For example if Tiger Woods decided to leave his golf team, he would be in such demand that he might be in and then out of the job market in as little as a few hours, so a 30-day hiring process would have no chance of success..
2. Unfortunately, slow hiring does not improve the quality of those who you hire – You might assume that taking more time to make a hiring decision would result in better hires, simply because you had more time to gather information, to gather feedback, and to mull over the finalists. Unfortunately slow hiring has the opposite effect.
The longer you take, the lower the quality (i.e. the “on-the-job performance” of new hires) will be. The primary reason for this drop off, as mentioned in the first section, is that with an extended hiring process, all of the top candidates will likely drop out, leaving only weak ones to choose from.
Most managers don’t realize that the secondary impact of having all of the top candidates drop out is that the remaining candidate pool (that you will eventually hire someone from) may now only contain average and weak candidates. As a result, the extra time for decision-making is negated by the fact that you only have average candidates to gather that information on.
Unless you measure how quickly the quality of the candidate pool drops over time, you probably won’t realize how damaging delayed hiring can be. You can easily find out how long it takes before the top candidates drop out by first identifying the top 10 percent of your applicants and then periodically contacting each of them to see how many days pass before they move on (it is usually between 10 and 20 days).
The lesson to be learned is: that slow hiring may actually doom your firm to an extended period where you only hire average or slightly above-average candidates. Recruiters may offer the excuse that the weak applicant pool that they presented is a result of the highly competitive marketplace, but in many cases the actual reason may be a slow hiring process that only exists at your firm.
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3. You will lose significant revenue and productivity because vacant positions are open for too many days – A stretched-out hiring processes means that vacant positions go unfilled for months. Although some mistakenly think that having position vacancies saves salary dollars, smart leaders instead calculate the damage caused by what are called excessive “vacant position days.”
For example, the economic damage caused by having a revenue-generating position vacant longer than necessary may be as much as $5,000 per day simply because a vacant seat in a sales job or revenue collection job can’t create or capture revenue. Vacancies in mission-critical jobs may mean that some critical work will actually stop during these unnecessary position vacancy days.
If an airline has insufficient pilots for each of its planes, it would lose revenue from each of those canceled flights. The pharmaceutical firm Merck found that having vacant positions in its R&D function had a direct measurable impact on the time it takes to develop new products for the market.
Shifting to management, team lead, and other key jobs, having no one in the job for an extended period of time will mean that productivity and output will suffer. In jobs where quality matters, error rates will increase and the quality of the output may also suffer because you have temps or other employees filling in as best they can while the position is vacant.
The lesson to be learned is: Each unnecessary position vacancy day has a significant dollar impact on productivity, innovation, and revenue generation. And because the Boston Consulting Group proved that having great recruiting has the highest impact of all talent functions on revenue and profit, it only makes sense that “slow hiring” (which is obviously not great hiring) will dramatically reduce both of those impacts by a measurable amount.
4. You’ll have to pay new hires more in salary because they will be bid on – When currently employed top talent enters the job market after working at the same firm several years, it is unlikely that they will know their real value right way. So if you are the first firm to approach and hire them before other firms have a chance to make a bid, in most cases they will accept your initial salary offer with little or no haggling.
However, if you have an extended hiring process, there will be ample time for other firms to recruit these same top candidates. And once multiple firms start fighting over and literally bidding on one of your candidates, their salary demands will invariably increase once they realize their true market value.
The lesson to be learned is: If you make fast decisions before there is any competition for an individual, you may be able to pay as much 25 percent less than you will have to pay after several firms have praised and bid on them.
5. Your image of being slow decision-makers will cause you to lose many top prospects – We already learned that delays will cause you to lose many top prospects and applicants, but you should also be aware that the appearance of slow decision-making will also damage your hiring results. This is because many top prospects and candidates view the long time it takes a firm to reach a hiring decision as emblematic of your corporate culture and what business decision-making is actually like at your firm.
Because by definition, most top talent are fast and accurate decision-makers, it is highly likely that they will view slow hiring decisions as an indicator that once on the job, business decisions will be made just as slowly. A similar negative recruiting business connection may also be made by candidates if they see a lack of innovation in the recruiting process.
The lesson to be learned is: Many candidates view their first and only interaction with the firm (i.e. the recruiting process) as an indicator of what it’s like to work there. So if commenters on glassdoor.com rate your recruiting process as slow, expect it to have a negative impact on recruiting.
Tomorrow: Seven (7) more reasons slow hiring can damage your business results